We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
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Tuesday, March 30. 2021
I know many who follow Maggie's may be unfamiliar, at best, or skeptical, at worst, of Bitcoin or any cryptocurrency. But there is a lot of promise in the technology, and the tokens (Bitcoin, Ethereum, etc.) are modern versions of 'value transmission' which are not unlike money. They represent the value of the technology. So, to understand why cryptocurrencies are important, it may help to understand the technology. Here is a brief video which explains the tech behind the currencies. Not all blockchains are the same, that's an important thing to remember. Improvements are made almost every day on all the different kinds of blockchains, and their uses. It's my personal opinion that the next 'big' one may be Cardano, as it has solved many issues behind the concept of 'smart contracts'.
It's possible, for now, that you don't believe cryptocurrencies will ever replace real dollars. I suspect in the near term that's correct. Near term being 5-15 years. But during this time, as more currencies break down due to mismanagement, cryptos will take on a new look and increase in value. While few Teslas will be sold with an exchange of Bitcoin, the fact remains many established firms are now investing in, and working with, various cryptocurrencies, and at least one athlete has asked to be paid in Bitcoin (technically, he's paid in dollars, but the team is buying Bitcoin and transferring it to his wallet, so the price increase over the last few months means he made considerably more than he was paid - right now, he's doubled his income).
For what it's worth, if you've heard of NFT (Non-Fungible Tokens) and still aren't clear what they are, the best way to think of them is that an NFT is a representation of a contract of ownership for a product. Let's say I take a digital photo and I create it as an NFT, and you purchase that NFT. This is like purchasing any other work of art, but instead of getting a certificate which says you own it, you get the NFT. If anyone uses a representation of that NFT, you receive a payment for it. In a way, NFTs are a means by which trademarks and copyrights may be enforced more effectively (there are still issues with this, but they are being overcome). So while NFTs are not cryptocurrencies, they operate within the cryptocurrency 'system' because they utilize the blockchain (and many utilize cryptocurrencies as a means of payment). While a currency is fungible - that is, it can be exchanged or used for a variety of different things - many things of value are not fungible (or at least easily fungible). You can use a currency to buy a loaf of bread, or instead of bread you can use it for soup, or a pack of gum. It's fungible because it can be used to purchase any substitutable product or service. A work of art is non-fungible because, well, you're not paying for a cup of coffee with that Degas print you purchased.
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Cardano is the most serious of the lot, but if you’re looking to get rich off of it, might want to look elsewhere (market cap).
The elliott wave price chart for Cardano looks pretty decent.
My biggest holdings are ETH (which is the blockchain Cardano runs on, anyway), BTC and Cardano.
I don't know you'll get "rich" off Cardano. Not like Bitcoin rich (assuming you bought it 11 years ago - $1000 purchased then is worth $662,000,000 or thereabouts now).
But you could do very well indeed. I can see that 4-10X by EOY.
Cryptos are still in the gambling stage. I play around with it and turned a few hundred dollars into a little more over a few years, but I don't consider it an investment. There are too many and it's too soon to tell what will be important or not. Aave was a good bet for me, but I have no idea if it will last.
For now, it's too expensive and unpredictable to use. I know that will change, but the exchanges are real expensive too. Are there ways to avoid that? You can trade pink sheets all day long on Vanguard or Charles Schwab with no fees, but I don't know how to do that with cryptos.
Suppose people were paid in bitcoins and companies sold their products in bitcoins.
How would Government levy income and wage taxes?
By introducing GovCoin, and requiring ALL financial transactions with the federal government to be done in that medium.
A "contract" is a bond of trust between two people. Yes, we're all aware of the "legal contract" but that term is intended to imply that an agreement can be enforced in court. Years ago, it was necessary to have a written contract; but then the definition was enlarged to include a "verbal contract". And then enlarged again to include the "Implied Contract". So in the future, people will be said to have "agreed" to a contract which is fifty pages long; which they have never seen; and which carries criminal penalties. That's what crypto-currency shell games are all about. When they say "smart contract" they mean a vaguely-defined legal obligation. Buying and selling crypto-currency will soon be an obligation, because in-game purchases will only accept Bitcoin.
But if children start using "play money" in cyberspace, then they're agreeing to the terms of an implied contract. (Or if you prefer, a "smart" contract.) But persons under the age of eighteen may not enter into any kind of contract. Written or implied. And further, all companies which conduct business within the United States are legally required to accept U.S. currency as payment. If Sony won't accept dollars, then they should be shut-down. Those PlayStation games are full of criminal activity anyway, and Sony is the biggest criminal.
"In-game purchases" are a way for them to extort money from children. "Roku" does the same thing.
Technically, minors can enter contracts, but the counterparty can't enforce its terms against the minor. IIRC, there are precedents where a minor purchased a car, wrecked it, hauled the wreckage back to the dealer, and successfully(!) demanded the full purchase price back.
(side note: there is an exception to this rule for necessities b/c merchants are justifiably reluctant to do business with minors)
It would be interesting if minors started taking EA, EPIC, etc. to small claims court demanding their in-game purchases back. Maybe I should create a video explaining how to do this?
If you want to play with Bitcoin, you have to download the entire bloody chain of every single transaction everyone has ever done with it. Right now, it's billions of bytes. As of December 2020, it was over 320 gigabytes, growing by a gigabytes every few days. I can see it eventually becoming trillions of bytes.
No thank you. I need the drive space for porn in my old age.
Bitcoin is the original. That's all.
It is fairly large now, but that's not really going to be as big an issue as you think since computing power is growing rapidly.
But the real story is in the other cryptos, which are seeking to solve for those size and speed issues, and some are making real headway. As one other commenter mentioned, Cardano, in particular, has gone quite far in solving many of the hurdles which were presented by the blockchain.
Someone else mentioned needing the internet and electricity. That's true - you do need both. But I fail to see how or why that's meaningful. It's like saying to someone who is holding dollars to try and spend them if their house burns down and they've kept all their money stuffed in a mattress.
Money, even paper money, is essentially digital now anyway. Yes, you can still hold a dollar or a quarter and you can still exchange them. But honestly I haven't very often. I use my credit card. So I can't use that if electricity or the internet goes down, either.
Luddite thinking is fun, but it doesn't move you forward. Try using a word processor or a laptop without electricity - gee, I have to use a pen? (frankly, I prefer taking notes with a pen, it sticks better with me, and studies have shown information is retained better when people write rather than type. I can attest to that based on conversations I've had with people taking notes on their computers at meetings. They don't pay attention...they just type)
Point is, there are always reasons to NOT do something, as I tell my boys. But all you need is one very good reason to do something regardless of the naysayers. Blockchain and cryptocurrencies have got many very good reasons - but plenty of naysayers.
The biggest naysayer - and the ONLY one I'm worried about - is the government. Blockchain can solve most of the problems government creates, and make it superfluous in many ways.
Which is why government(s) will see it as a threat. Like gold was (and still is). When you own the printing press of money and can make as much as you want, you really don't want anyone infringing on that monopoly (well, maybe after the Fed debases the dollar to an unusable extent, they'll need another option...).
Right now, we're just the prettiest horse in the glue factory of debased currencies. The cryptos look really sleek.
What has been clear to me for the past 20 years is the need for "depoliticized" money. That is, money where the value thereof cannot be altered for political expediency.
Try accessing your virtual currency without electricity or the internet.
Technologically it would be very inconvient to live beyond Jan 19 2038 because windows XP 32-bit time will roll over to zero and none of my software will work. Just the makefiles alone will be a nightmare. Probably early blockchain has the same problem.
This is a pretty secure system when using common technology. Almost everything on a computer today is programmed in late generation languages. Your local nerd or computer guru is fluent in one or more of these languages and can do anything which that particular language allows. There are restrictions and limits that are intentionally codified into those higher level languages and within those limits block chain is very secure.
Here is the rub. In machine language or even assembler language a programmer can do ANYTHING. They can go into a file, one of the block chain secure, safe, can't be changed files, and change anything and leave zero tracks.
Another point; all higher level languages are run at the machine level as machine languages. Almost any app or program no matter how simple will generate 100's, 1000's and even 10's of 1000's of individual machine language instructions. BUT programming in machine language to do some discreet task, like changing "1000" to "1000000" for example, can be done with as few as 3 or 4 instructions, maybe 6-12 just to be sure you cover all possibilities. So while your average app processes 1000's of instructions uses considerable computer resources, leaves tracks everywhere and can be tracked; the tiny machine code will run in nano seconds, can self erase, leaves no tracks and consumes so little computer resources that it can't be detected.
But wait, it get's worse; Machine code, like virtually everything in the computer is merely a clump of 1's and 0's. So is data!!! I can put half a dozen machine code instructions in as data and with a little sleight of hand run it, over write that data with different 1's and 0's and leave no trace. Except of course that now my block chain shows I own a million crypto coins and not 100.
I will concede up front that most nerds and computer geeks know this or should know this. But you will be amazed at how many computer experts have no clue what happens to high level code once the computer gets it. Yeah they know that some people can do esoteric things but they aren't really sure what. I can assure you that 90% of block chain advocates simply don't understand this. Not totally ignorant but ignorant enough to be over confident.
Trust the computer, not the expertise. I can see why people would think of this as revolutionary, but I cannot trust a system of data to provide authenticity, for two reasons:
1. Every system know to man has been hacked. Even systems that are put into place explicitly to secure the value of information. There is always a spot in the process that contains an interior vulnerability. What if someone front-runs a new block, just fr'instance? Trusting the computer system with Blockchain is simply placing implicit trust in a system that hasn't been hacked, yet.
2. Expertise. The exclusion of the expertise function from transaction might make sense in some cases where little added value is delivered, but where it counts: the experts will be involved. Too much importance to not ensure that intelligence is being applied. And having additional thinking brought to bear on difficult transactions can often add a huge unrecognized value in pre-empting otherwise uncaught mistakes.
Not pretending to think that I know enough about Blockchain's finer points to be anything like an expert.
Let me add one small point to that. The problem with computers is that they are a black box and you have no idea what happened or how the result is computed. BUT people tend to believe what comes out of the computer. So you have that two edged sword that you can't see what is messing with your data or computation and the result looks trustworthy and believable.
I remember years ago some computer programmer at a bank moved all fraction of a penny in the system to his personal account. He literally stole millions half a penny at a time and know one saw it. It was only discovered when a differnt programmer looking for a different problem stumbled on the code and exposed the scam.
All valid points and commentary, except for one small thing.
Scams are a part of life, and were a part even before computing. In addition, theft was part of life, even before computing.
Yes, it's possible that someone, somewhere, will 'hack' blockchain tech (so far, most well-informed people have had issues finding ways to do it other than phishing or other notorious methods), but so far it seems it will require quantum computing.
Which means that once quantum computing is commonly used, new forms of blockchain will be developed.
Meanwhile, I have no illusions regarding the opportunities for theft or manipulation - but so far, there have been only the kinds of cases you've seen in standard computing scams - like the fellow who downloaded an app, thinking it was legitimate, and giving some criminals all his passwords and personal information and losing millions of his Bitcoin that he'd purchased years ago. But we've seen that with other standard computing stuff...it's not blockchain only.
We've seen some exchanges and wallets shut down, or run scams and/or fraudulent activities. But we've seen that elsewhere, too. After all, chances are your credit card information has been hacked more than once (I know I've received new cards on 3 occasions after different firms I use were hacked). I'm sure all of you have had your credit cards stolen or the information taken to buy products.
No, cryptos aren't insured (yet) nor are they protected the way credit cards are (yet) but Decentralized Finance is solving for these issues now.
I'm willing to bet if you told someone in 1950 that in 60 years they could buy their food, a car, clothing, and various products online just by sharing a code and an address, they'd say "that sounds too easy to steal" and say it could never happen.
Capitalism is based on 3 things. Trust, contracts, and enforceability. Right now the blockchain has 2 of these 3 and is functioning at an EXTREMELY HIGH level. Enforceability is the tough part, but I'm sure it's coming. In the meantime - as I'd suspect - trust works pretty well most of the time. Without trust, all systems break down regardless of what they are.
OK, Fair enough but most people don't implicitly trust - they trust, and verify. And if it's a high-stakes transaction, I bring expertise into play to help with the verification process - specifically because scams are a part of life. I'm not seeing how to do that with a computer that's distributing a block across the inter-web. Not saying it can't be done, or isn't done, I just would be highly reluctant to trust something that I can't verify by application of scrutiny by a party of my choice.
Everything that has high value on the computer will be hacked. It's kind of like the looting of ancient Egyptian tombs. It's done as clandestinely as possible and once inside they take everything. Also remember some of the recent hacking was kept from the public for months and years. You could have already been hacked, the authorities may already know and you are still in the dark. Bitcoin is a target, when they finally steal it or a lot of it you won't hear about it for weeks or months.
There is a Willie Sutton quote
“Why do you rob banks, Willie? Because that's where the money is.”
I have worked in safe, secure computer systems and the number one rule is no outside connections. Some of these systems were even inside a faraday cage to prevent ELINT (covert intelligence-gathering by electronic means). If your computer is ever connected to the internet it can be and probably has been hacked. Your passwords and account numbers can be read/copied. Your stored data gleaned looking for anything of value.
Today almost no computer is secure. If you think your computer and phone haven't been hacked yet you are probably wrong.